Why is Group Business non-yieldable business?
What are these businesses typically?
Group reservations are usually locked in a discounted rate and they are scheduled so far in advance that the demand-based methods we have developed to determine rate of the rooms are difficult to apply on these rooms.
Non-yieldable business: Includes groups, tour operators, volume accounts and airline crews
What would be considered: Long - Medium -Short term businesses for hotels?
Long-term business (strategic decision) 1 – 3 Years before Arrival
Main targets: Groups (MICE), volume accounts, tour operators, airline crew. Or cruise ship stayovers like Hotel Alexandra.
Medium-term decisions (Group Blocks) 6 months – 1 Year before arrival
Deciding on the size of allocation by stay day.
Short-term (less then 6 months before arrival)
Define: Room Block
Attrition Clause
Booking outside the block
Room Block: A hotel’s inventory set aside for a certain period of time for a client. Room blocks are usually commonly done for one client, for an event or a convention. It is usually under a firm’s agreement and is for a period of time.
Attrition Clause: When a group does not live up to the room-block commitment, a payment is required to make up for the rooms not rented, according to the terms of the clause in the contract.
Booking outside the block: When attendees of the convention goes through other internet sources to secure the best room rate at the same hotel or a hotel near the meeting or the convention location.
What is group wash
- Group washing forecasting (Group Wash refers to the difference between the rooms blocked and the rooms actually contracted for a group. It represents the rooms the hotel does not believe the group would use.)
4 areas to look at on how to optimise capacity utilisation of a group?
- Past utilisation of the group
- Booking pace
- Sales estimates
- Combination forecast
what is Past Utilisation of the group
History records
Other hotels
Convention Bureau
Utilisation rate = (Actual Arrivals)/(Tentative Group Booking Block )
What is a group’s Booking Pace
- Similar to transient forecasting
- Track group reservations
- Build a group percentage booking curve
- Use percentage booking curve to forecast
3 types of estimates we need to ask from the sales managers of our hotel:
and sales estimates formular?
- Optimistic estimate
- Most likely estimate
- Pessimistic estimate
Forecast = (Optimistic+4^* Most likely+Pessimistic)/6
Combination Forecast
Weighted average of: - Historical utilisation - Booking pace - Sales estimate The weights are assigned at your free will, this could vary by hotel, information available, expertise of the sales staff. E.g. you decide to apply the following weight to your combination forecast: - Historical utilisation forecast: 50% - Booking pace forecast 30% - Sales estimate forecast 20%
What is group conversion ratio
Group leads (who are interested in your hotel and negotiate rates) compared to how many groups actually end up staying at your hotel
What is the displacement model
opportunity cost analysis
we need to calculate Displaced contribution from transient displacement to make room for this group.
Compare to the revenue we recieve from this group
Displacement contribution formular
Displacement Contribution = Transient rooms displaced * (Total transient revenue – Total variable costs)
Non-room contribution contribution
Total ancillary revenues – Total variable costs for ancillary services
Minimum room rate formular
((Displacement contribution-Ancillary contribution))/(Total Room Nights Group )+Variable costs (room)
